Interim Budget: HSBC expects the central government to set a fiscal deficit target of 5.3% of GDP in FY25, with buoyant tax revenues and cuts in current expenditure. The government plans to bring the fiscal deficit down to 4.5% of GDP by FY26. Despite higher subsidy spending, the government is likely to meet the fiscal deficit target of 5.9% set for FY24 due to higher tax buoyancy. The government's spending on capital expenditure is expected to be lower than budgeted, contributing to deficit containment. HSBC also predicts that fiscal consolidation will lead to RBI delivering two rate cuts in FY25.